A leading mortgage broker is encouraging homebuyers to re-evaluate their property investment aspirations due to the current low affordability.
Warren O'Rourke, national manager of corporate affairs at Mortgage Choice, said there are good long-term opportunities to be had for those willing to research areas outside those in which they were previously going to purchase.
Despite property investment producing excellent returns on average over five and 10 years (between 7.5% and 25.5% across Australia), Graham Joyce, president of the Real Estate Institute of Australia (REIA), said rental yields - which are currently between 2% and 4% - would need to rise in order to attract investors back into the market.
With current rental yields ranging between 2% and 4%, a large increase in yields and consequentially more investors is needed in order to alleviate the apparent rental shortage, said the REIA.
Vacancy rates reported by the Mortgage Choice/REIA Real Estate Market Facts December quarter 2006, released mid-March 2007, revealed rates as low as 0.5% in Adelaide and 2.3% in Hobart.
It seems renters have no choice but to invest; with median house prices rising during the quarter in all cities except Darwin and Hobart.
While Sydney leads the chase for most expensive city (with a median house price of $523,600), Canberra experienced rises at 6.1% over the December quarter.
With results like these Joyce said investing is becoming a favourable option.
"The tight rental market and potentially improving yields offers opportunities for investors," said Joyce.
In the December quarter Mortgage Choice/REIA saw Perth lead the house rent price increase by 17.4%.
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